THE 16th Fulani Emir of Kano, Muhammadu Sanusi II has raised concerns over the Federal Government’s continued reliance on borrowing despite the removal of the petrol subsidy, questioning the country’s fiscal direction and sustainability.
News Point Nigeria reports that Sanusi, a former Governor of the Central Bank of Nigeria, made the remarks at the annual lecture of The Niche online newspaper on Thursday, where he offered a critical assessment of Nigeria’s current fiscal trajectory.
While acknowledging that the removal of fuel subsidy and the liberalisation of the exchange rate were necessary reforms, he warned that poor timing and a lack of fiscal discipline could undermine the anticipated benefits.
According to the monarch, Nigeria’s longstanding practice of supporting foreign refineries while neglecting domestic refining capacity reflects a deeper systemic failure that must be addressed.
“I have always said the subsidy regime was unsustainable. We cannot continue supporting foreign refineries. We’re an oil-producing country. Keeping refineries open abroad while we’re not doing our own,” Sanusi said.
He, however, expressed optimism about recent developments in the sector, noting a shift towards domestic refining and reduced dependence on imports.
“Today, we have a situation where we have our own domestic refinery. We’re not importing petroleum products. We’re even exporting to Europe, and this is very good for the economy,” he added.
Despite supporting the reforms, Sanusi raised concerns about their sequencing and timing, suggesting that certain critical steps may have been overlooked.
“Artificial exchange rates, especially when you’re printing money, cannot work. There was going to be a devaluation,” he said.
“For me, removing subsidy or liberalising exchange rates, these are good interventions. Were they done at the right time? Those are certain questions. Were there other things that should be done that have not been done? These are other issues.”
He argued that implementing exchange rate liberalisation in a loose monetary environment contributed to the naira’s sharp depreciation.
“It’s not enough to say, oh, they removed subsidy. You had to. When you get to a point where 100% of your revenue goes into debt service, you cannot continue. Where is the money going to come from?
“However, if you decide to remove subsidy and liberalise exchange rates in an environment of very loose monetary conditions, before you have tightened money supply, the naira drops to a bottomless pit. That was a timing issue.”
Sanusi further questioned why the government continues to borrow heavily even after eliminating subsidy payments.
“We’ve removed the subsidy. We’re now spending it. What we should not see is fiscal consolidation. You cannot remove wastages and continue borrowing. I’ve said this before. You need to see the benefits.
“If you’re not paying the subsidy and you’ve got the money, why are we still borrowing and borrowing? What are we borrowing for?” he queried.
Recent figures underscore his concerns. Reports in April indicated that the Federal Government increased its 2026 borrowing plan by ₦11.31 trillion, bringing the total projected borrowing to ₦29.20 trillion.
In a related development, President Bola Ahmed Tinubu has sought the approval of the Senate for a fresh $516 million loan to finance the Sokoto-Badagry Superhighway project.